In this case, plaintiffs alleged that they would be harmed by trading of effluent discharge rights, because such trading would create “hotspots” that would damage their enjoyment of the water bodies where the elevated discharges would occur.

Judge Contreras was having none of it. First, he found that the plaintiffs did not have standing. In fact, he found that the plaintiffs met none of the prerequisites for standing – injury, traceability, or redressability. Three strikes and the plaintiffs were very definitely out. The primary weakness in the complaint was that the pollution trading discussion did not actually authorize any specific permit or any specific trades. As the court noted, plaintiffs would have the right to challenge any NPDES permit issued in the Chesapeake Bay watershed that actually allowed trading. Moreover, the discussion provided that any trading would not be allowed to cause an exceedance of a water quality standard. In short, trading could at most authorize warm spots, but not hot spots.

He also found that plaintiffs had not stated a claim, because EPA’s discussion of pollution trading in the TMDL – as opposed to the TMDL itself – was not final agency action. In some respects, the determination that the trading discussion was not final agency action was based on the same circumstances as those which torpedoed plaintiffs’ standing:

The EPA’s language in the Bay TMDL regarding offsets and trading does not legally require any conduct, but rather serves as an “informational tool.”

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EPA’s language cannot be mandatory because the CWA does not confer on the EPA the authority to command or to require the States to take specific actions, with respect to their implementation plans.

This is an important case, but not a difficult one. Trading is important and we need to encourage it, so it is important that the concept is not subject to challenge at this point. I hope that the plaintiffs here rethink their opposition. In any event, they are not going to have a case unless and until they have an individual permit to challenge.